6 Things You Need to Know Before Opening a Restaurant
Opening a restaurant is the dream for many people. In fact, if you’re a chef, entrepreneur or food lover, you likely have a clear idea in your head about what your restaurant would serve, what kind of culture it would reflect, what kind of service it would give, and the success it would have.
With all of that said, no matter how passionate and prepared we feel to be restaurant owners, the reality of owning one is not all rainbows and butterflies. Every job requires your full attention, dedication and hard work, but a restaurant requires more. It requires putting in more hours. It asks you to think of everything. It needs you to be passionate about serving the best food. And this is all while thinking about what’s best for the business.
No matter the challenges of owning a restaurant, food, and business are a great combination, and with a few tips and tricks, can turn into a success. Although there is no secret formula, these are six things you need to know before opening a restaurant.
1. Not everyone is cut out to be a restaurant owner
Owning a restaurant is like a puzzle. For it to be completed successfully, it requires you to put all the pieces together. And with upwards of 90% of restaurants failing within the first year, it’s not for the faint of heart. Loving food or cooking is not enough. To be a successful restaurant owner, you must have an enormous dedication to the business. You will work long hours, putting your employee’s well-being before yours, and sacrifice a large part of your personal life to make your business work. Before opening a restaurant, it’s important to think long and hard about whether this lifestyle will work for you.
2. Consider your location carefully
A location can make or break a restaurant. In fact, according to a recent study, 52% of Americans say that a convenient location is one of the most important factors in selecting where to make a reservation. When you open a restaurant, you’re selling an experience and, simply put, higher frequency locations get more customers. If your restaurant is located near an area of construction, hard to access or located somewhere no-one can find, it is more than likely your business will suffer.
When you’re thinking of opening a restaurant, make sure you know what you’re offering your customers and that they can access your location without trouble.
3. Plan on a significant up-front investment
Depending on the size and location, a restaurant requires a big investment to get started. Opening a restaurant is not cheap, with initial expenses starting around $175,500 and reaching into the high six figures. From renting and renovating a space, to buying equipment and hiring new employees, none of these things come cheap! If you are looking for a way to get into the restaurant business without spending a small fortune, consider catering, a food truck, or even a pop-up restaurant. Each of these restaurant concepts is significantly cheaper than a traditional brick and mortar.
4. Choose a clear restaurant concept
A clear restaurant concept is a key tenet in a successful restaurant. People go to restaurants not only for the food but also for the experience, aesthetics, and feeling. Many restaurants build their customer base around how they serve their food, the style of their interior and their core values as a business. This is why a brand-forward restaurant concept is crucial when you’re opening a restaurant.
Finding the right concept can be tricky. You can’t solely rely on the things you like because that might not be what most people want. And you can’t only rely on what people want because then it wouldn’t be your restaurant. The goal is to find the right balance between what resonates with your audience, but still feels authentic to you.
5. Put a business plan on paper
To open a restaurant, you will need a business plan. A business plan will not only help you secure investors, but it will also help you understand exactly where you stand in the market, what risks might exist, your competitive advantages, and more. While working through a business plan, you may also find potential red flags — like health codes, tax laws, food costs and minimum wage requirements — that you might never have noticed without laying it out on paper.
6. Invest in the right technology
As with any business, opening a restaurant without the right tech tools in place can be detrimental to your future success. From inventory management and invoice processing, to point of sale software and reservation and seating management technology, there are many things to consider across both your front and back of house ahead of opening day. When looking at new technology, ask yourself the following questions to make sure you’re bringing the right companies on board:
Does this company integrate with the other technologies in my restaurant?
Do they offer 24/7 support?
Will I own the data I collect through these systems?
Does the system keep me fully PCI and GDPR-compliant?
Does the technology company offer easy ways for me to train new employees?
What’s my ROI on this system?
The restaurant business is one of the most competitive industries to get started in. It requires a significant investment, a big personal commitment, sacrifice, and passion. However, it is also one of the most rewarding. Food always brings people together, and being a place for people to connect and celebrate is a huge payoff in the end.